Kaap Suiwelkoöperasie Beperk v H W Louw

The respondent (H W Louw) was a member of the appellant, a co-operative association incorporated under the Co-operatives Act 91 of 1981. From April 1991, the respondent stopped delivering milk to the appellant and instead delivered to Simonsberg cheese factory. On 4 December 1991, a letter was written on behalf of the respondent indicating his decision to resign as a member. The appellant's board approved the "application for termination of membership" on 11 February 1992. On 31 August 1992, the appellant wrote to the respondent confirming termination of membership and paid him for his shares and certain member funds. The respondent accepted this payment and deposited the cheque. In January 1993, the respondent applied for membership again and was accepted from 19 January 1993. On 9-10 September 1993, at a general meeting, the appellant resolved to distribute a reserve of R49,336,571.00 among members based on their uninterrupted period of membership over nine years preceding and up to 28 February 1993. The respondent claimed his membership was continuous from 20 April 1987 to 28 February 1993, which would entitle him to a larger share of the distribution.

• Whether the resignation letter of 4 December 1991 constituted a unilateral resignation under article 33(1) of the co-operative's statute or an agreement to resign outside the statute
• Whether the parties reached consensus to expedite the effective date of the resignation
• When the respondent's membership was terminated
• Whether the respondent had continuous uninterrupted membership from 20 April 1987 to 28 February 1993

The appeal succeeded with costs. The order of the court below was set aside and replaced with an order dismissing the application with costs.

A co-operative association may waive the benefit of delayed resignation provisions in its statute and agree with a resigning member to expedite the effective date of resignation. Where a resignation letter contains a request for early termination of membership, and the co-operative communicates acceptance of that termination, pays out the member's shares and funds, and the member accepts such payment and subsequently re-applies for membership, the parties have reached consensus for early termination of membership by agreement outside the statutory provisions. The resignation takes effect when such consensus is reached, not at the statutory delayed date.

The Court expressed doubt as to whether the resignation letter of 4 December 1991 satisfied the requirements for an effective unilateral resignation under article 33(1) of the statute, which requires a clear and unambiguous indication of intention to resign (citing Boerne v Harris 1949(1) SA 793 (A) at 801). The Court noted there was merit in the argument that it should be interpreted as an invitation to agree on resignation outside the statute. However, for purposes of the appeal, the Court was prepared to assume it constituted a unilateral resignation. The Court also noted that even if the letter was not viewed as a unilateral resignation, it would constitute an offer to resign outside the statute which was accepted by the appellant, leading to the same result regarding termination date.

This case establishes important principles regarding resignation from co-operative associations in South African law. It clarifies that: (1) a member can resign either unilaterally under the co-operative's statute or by agreement outside the statute (as established in Cape Dairy Co-operative Ltd v Ferreira 1997(2) SA 180 (A)); (2) parties can agree to expedite the effective date of a resignation that would otherwise be delayed under statutory provisions; (3) the co-operative can waive the benefit of delayed resignation provisions in its statute; and (4) conduct of the parties, including acceptance of payments and re-application for membership, can demonstrate consensus regarding the effective date of resignation. The case demonstrates the application of general contract law principles to the specific context of co-operative membership.